Commodity Selloff and Brazil’s Copom Minutes Lift Dollar, But Downtrend Holds
Key Points
- USD/BRL edged higher to R$5.26 as commodities tumbled and geopolitical tensions eased.
- Investors await the Copom minutes for clues on Brazil’s rate-cut timeline.
- Charts show a modest bounce within a broader downtrend that remains intact.
The dollar opened February on a firmer note, finding support from a sharp selloff in commodities and fading Middle East tensions.
On Monday, USD/BRL closed at R$5.2593, up 0.22%, extending the late-January rebound. The DXY index climbed 0.64% to 97.632, reinforcing dollar strength abroad.
The move came after President Donald Trump signaled progress with Iran, stating the country was “talking seriously with Washington” about a potential deal.
That eased risk-off flows that had previously favored emerging-market currencies. At the same time, commodity prices fell hard.
Brent crude dropped 4.36% to $66.30 per barrel, while iron ore slid 1.26% to 783 yuan ($112.62) per ton. For a commodity exporter like Brazil, those declines weigh directly on the real.
Markets are now focused on Tuesday’s release of the Copom minutes. Last week, Brazil’s central bank held rates steady at 15.00% but signaled the start of an easing cycle in March.
Investors want clarity on the pace and magnitude of cuts. A dovish tone could pressure the real further. A cautious message might help it stabilize. The Warsh factor lingers as well.
Trump’s nomination of Kevin Warsh to lead the Federal Reserve has reduced perceived political tail risk at the U.S. central bank. Analysts see it as a signal that aggressive rate cuts are less likely, which supports the dollar at the margin.
Technical Overview
The charts tell a story of a bounce, not a reversal. Early Tuesday pricing showed USD/BRL near R$5.26, holding gains from late January but still well off the December highs above R$6.00.
4-Hour Chart: Momentum has improved. RSI sits in the mid-50s (56.44), signaling neutral-to-bullish conditions on short timeframes.
MACD has flipped slightly positive, suggesting short covering and fresh buying interest. Price is testing the lower edge of the Bollinger Band cloud, with near-term resistance at 5.29–5.33.
Daily Chart: The broader picture remains bearish. RSI hovers in the mid-30s (34.60–39.13), approaching oversold territory but not yet signaling exhaustion.
MACD is negative, and price trades below the 20-day and 50-day moving averages. The downtrend from December’s peak near 6.00 remains intact.
Weekly Chart: The structural downtrend is clear. RSI sits around 38–45, consistent with a market that has corrected sharply but not bottomed.
MACD remains negative. Price has broken below the Ichimoku cloud and key long-term moving averages. The late-2024 rally has been fully unwound.
Key Levels
| Support | Resistance |
|---|---|
| 5.22–5.24 | 5.29–5.33 |
| 5.17–5.19 | 5.39–5.40 |
| 5.00 (psychological) | 5.45–5.46 |
What to Watch
Copom Minutes (Tuesday): Tone on inflation and rate-cut timing will set near-term direction.
U.S. Data: Any shifts in Fed expectations could move the DXY and spill into EM FX.
Commodity Prices: Further weakness in oil and iron ore would add pressure on the real.
Geopolitics: Iran headlines remain a wildcard for risk sentiment.
Bottom Line
The dollar has found a floor after January’s 4.4% decline, but the rally remains corrective. Short-term charts show improving momentum.
Daily and weekly frames remain heavy. Until USD/BRL reclaims the 5.39–5.45 zone, the path of least resistance stays lower. The Copom minutes could be the next catalyst—either way.
Related coverage: Brazil’s Morning Call | Latin America’s Fourth-Largest Economy Is Caught in a Policy This is part of The Rio Times’ daily coverage of Latin American markets and financial news.
Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
+0.51%
171,906.72
+0.51%
66,105.23
+0.57%
11,537.98
+1.76%
2,995,129
+2.81%
2,510.72
+2.09%
60,222.25
-0.17%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 171,906.72 | +0.51% | +21.85% | 171,031.73 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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